Cookies on the Odgers Berndtson Website

We use cookies to ensure that we give you the best experience on our website. This includes cookies from third parties such as Google Analytics. Such third-party cookies may track your use of the Odgers Berndtson website. If you continue, we’ll assume you’re happy to receive cookies on the Odgers Berndtson website. To learn more about the use of cookies on our website or to opt-out from them, please visit our Privacy Policy.

Eyes on the prize

There are hundreds of philanthropic prizes on offer around the world but are they really as clearly defined as they should be?

11 Nov 2016

Philanthropists, governments, and businesses have used prizes to spur innovation for much of history; we owe incentive-based competition for creative solutions ranging from maritime clocks to plastic. Today more prize-based philanthropy competitions are known to more people than ever before. For example, challenge.gov, the United States federal government’s hub for incentive competitions, lists 707 unique awards run by more than 80 different government agencies. Its website states: “More than $220 million in prize money… offered since 2010”. However, the ubiquity of grants has led many to question whether these competitions are as effective as they could be.According to some, the answer appears to lie in the specificity of competition guidelines.

In June, the Chicago-based MacArthur Philanthropy Foundation*, launched 100&Change, promising a “$100 million grant to fund a single proposal that will make measurable progress toward solving a significant problem… affecting people, places or the planet”. An award of this size is especially impressive when, according to the MacArthur Foundation, “the average size of a foundation grant was about $138,000 in 2012”.

Indeed, there are hundreds of smaller competitions each offering the promise of cash in exchange for world-changing solutions. The topics are varied, from the Virgin Earth Challenge inviting applicants “to come up with ways of demonstrating greenhouse gas removal activities” to NASA’s Vascular Tissue Challenge which rewards the creation of “thick, metabolically-functional human vascularized organ tissue in a controlled laboratory environment”. However, whereas other players often look for targeted achievements, the MacArthur guidelines are wide open.

The winner can focus on any problem, so long as the proposed solution is “meaningful, verifiable, durable and feasible”. Supporters say this broad call leaves a lot of room for entrepreneurial imagination. Critics argue that it gives a lot of rope.

With such a wide range of competitions, there is a large sample size from which to identify what works. From op-eds in The New York Times to reports by management consulting heavyweights like McKinsey and Deloitte, there is agreement that clarity is key in order to contextualise the issue and properly design the solution. A clear problem must be posed that is both measurable and achievable within a given timeframe.

Successful examples of competition-backed innovation are everywhere and the stories almost always begin with a well-posed problem set within clear boundaries. In 2010, after the earthquake devastated Haiti along with its infrastructure, USAID and the Gates Foundation created an incentive prize to help revive the country’s financial services. The Haiti Mobile Money Initiative offered $10 million in rewards to tackle the very specific problem of a devastated economy in a country where only 10 per cent of the population had historically used traditional banks. Six months after the launch of the competition, two fully operational mobile banking services had set up shop. By October 2011, both of them won awards for achieving more than 100,000 transactions each, and a year after that, one surpassed five million. Proponents argue that the key to its accomplishment was a well-defined problem followed by tactically applied assistance from the Initiative.

The Postcode Lottery Green Challenge founded in the Netherlands works to “highlight products or services that [reduce] the greenhouse effect in a consumer friendly way and [contribute] to a sustainable lifestyle”. The competition requires that the winner show “the potential to reduce greenhouse-gas emissions by an amount you can roughly estimate [and] be realisable as a usable product or service within the next two years”.

In 2008, the winner was Ecovative, a manufacturer that uses mycelium to “grow high-performing, healthy, and affordable materials that replace synthetic foams and plastics”. After winning the Challenge, Ecovative, now trademarked as Mushroom® Packaging, has “enabled customers – including Fortune 500 companies, international mills and furniture makers – to meet design, production, and delivery needs while achieving sustainability goals”. Without the specificity of the required task, it’s arguable that Ecovative may have still won, but the defined problem helped all contestants shape their submissions with the goal of launching a feasible business model. Furthermore, although the competition does have a clear winner, the Challenge continues to work with other organisations that are interested in continuing to hone the ideas that don’t win, a practice that helps to avoid wasting the energies of other worthy applicants.

Without such targeted guidelines, it remains to be seen whether 100&Change will meet its goal. Perhaps the very genius of the competition itself is that it requires the applicants to describe the pressing dilemmas of our age. The principles of incentive-based innovation applied to identifying the obstacle as well as the solution could arguably find a more creative and productive winner. That said, we have learned that isolating and Philanthropy defining the problem is a more complex endeavour than it appears on its face. There is an entire tradition of experienced designers devoted to successful prize formulation. Historically, the most effective competitions spend time and resources identifying the outcomes sought in order to formulate a clear problem. Requiring contest hopefuls to do that job ultimately wastes their time on applications that will likely go nowhere; after all, there are typically only one or two winners for every hundred losers. This is pressing when this energy could arguably be used for more important things, like working together to solve the very crises the competitions are meant to tackle.